Best asset class in 2010??

[Fleeta]

OK, so I am fully cashed up with nowhere to go - here is my take

Property - over-valued, with IR increasing and grants disappearing, property will underperform in 2010.

Shares - likely over-valued, PE ratios will be high considering 2010 earnings will probably not be great, yields will be cut

Cash - likely to be eroded by inflation, higher IR may help

Gold/Silver - so pumped up by everyone at the moment I don't know whether to believe it or not

What is everyone doing with their coin and why???

 

[Nyden]

You've left it a little late to be entirely cashed up, haven't you? Most assets have already been in a substantial run up for the past few months - in fact, every asset you've mentioned has been.

Sorry, but chances are - shares, and property aren't going to fall back to a comfortable level for you. If you're waiting for a fall back before finally making the plunge, you may be in for a very long wait, and be left with very little money when the time comes

P.S. If anyone truly knew in advance as to what the best asset class were to be, they wouldn't tell anyone, and they'd be substantially wealthy.

 

[Sir Osisofliver]

OK, so I am fully cashed up with nowhere to go - here is my take

*Cracks knuckles and prepares to comment*

Property - over-valued, with IR increasing and grants disappearing, property will underperform in 2010.

Where does this apply? Do you think the property market is a) One large perfectly homogenous market with no variation based upon demographics and population densities or b) a chaotic market with fractal subsets or differing magnitudes and periodicity resulting in areas that run with different cyclical timelines?


Shares - likely over-valued, PE ratios will be high considering 2010 earnings will probably not be great, yields will be cut

Over what period of time does this comment apply? And Overvalued in comparison to what? Given that the average length of the share market cycle is 6.8 years, and that the percieved bottom of this corrective pattern occured on 9/3/09 - what does this tell you?


Cash - likely to be eroded by inflation, higher IR may help

Correct. Still not my favourite asset class.

Gold/Silver - so pumped up by everyone at the moment I don't know whether to believe it or not

If you don't have a clear view on direction from your fundamental and technical analysis - you will be gambling and it's probably not a smart move to risk capital.

What is everyone doing with their coin and why???

I'm almost fully invested (just waiting for this market to finish this movement) before topping up again.

Cheers
Sir O

 

[Fleeta]

You've left it a little late to be entirely cashed up, haven't you? Most assets have already been in a substantial run up for the past few months - in fact, every asset you've mentioned has been.

Sorry, but chances are - shares, and property aren't going to fall back to a comfortable level for you. If you're waiting for a fall back before finally making the plunge, you may be in for a very long wait, and be left with very little money when the time comes

P.S. If anyone truly knew in advance as to what the best asset class were to be, they wouldn't tell anyone, and they'd be substantially wealthy.

So you obviously don't believe this article then??
http://www.dailyreckoning.com.au/aussie-house-prices-bubble/2009/12/01/

I've ridden all of these asset classes over the past few years and still have quite a bit in shares at the moment. The thing is that after a close to 50% increase since March, I don't know what the trigger is to keep it going. Similar with housing, the boom is all caused by debt and the debt increase just can't keep coming.

I think I will make my asset allocation 40% gold, 60% shares. There is no point having 50% cash from what I can see.

 

[Fleeta]

*Cracks knuckles and prepares to comment*

Property - over-valued, with IR increasing and grants disappearing, property will underperform in 2010.

Where does this apply? Do you think the property market is a) One large perfectly homogenous market with no variation based upon demographics and population densities or b) a chaotic market with fractal subsets or differing magnitudes and periodicity resulting in areas that run with different cyclical timelines?

Nice use of big words I don't understand. Cheers.
But seriously, whilst it isn't perfectly homogenous, it is close to it right? I mean if the house on the waterfront is valued at $50k more than the one in the street behind it, and the one on the waterfront goes down by $50k, then logically the one in the street behind must also go down as well.

 

[TOBAB]

Get a decent balance in the lot mentioned. Avoid getting fearful and avoid getting greedy.

Balance can only be determined by your opinion.

BTW not a fin planner, but they do (usually) make sense.

 

[eddyeagle]

I would be interested to hear what SECTORS people think will outperform in 2010. Feel free to offer ideas!

My current view of the market in general is that it is pretty much fully valued, so sector selection will be critical in 2010.

 

[Nyden]

So you obviously don't believe this article then??
http://www.dailyreckoning.com.au/aussie-house-prices-bubble/2009/12/01/

I've ridden all of these asset classes over the past few years and still have quite a bit in shares at the moment. The thing is that after a close to 50% increase since March, I don't know what the trigger is to keep it going. Similar with housing, the boom is all caused by debt and the debt increase just can't keep coming.

I think I will make my asset allocation 40% gold, 60% shares. There is no point having 50% cash from what I can see.

Of course it's a bubble. But, you have no choice in riding it. If you choose not to ride the bubble, and if it continues on for years to come - your money will be eroded into nothing.

You believe that 50% is too much, others believed that 20% was too much, and sold out - and have since still been waiting for the 'big pull back'

No, I do not believe that article. I would never invest my money based on the ramblings of some idiot on news.com.au

 

[Sir Osisofliver]

Nice use of big words I don't understand. Cheers.
But seriously, whilst it isn't perfectly homogenous, it is close to it right? I mean if the house on the waterfront is valued at $50k more than the one in the street behind it, and the one on the waterfront goes down by $50k, then logically the one in the street behind must also go down as well.

Nope. Not even close to being homogenous. But pehaps I didn't make myself clear by my use of big words. Perhaps also you should think about the differences across a larger goegrapgic area, and within your target market.

Sydney (Being our highest population density area) is where the property cycle starts. Melbourne moves next, then Brisvegas etc etc on down according to population density. (This is very general stuff, of course localised pockets can occur where you get things like development corridors, new road developments etc).

By the time that the cycle complete's in lower population area's.... Sydney is almost ready to kick off again. It's a function of what is happening in other asset classes. Once the share market is starting to look expensive again in another few years, investment funds move into property, starting the cycle in Sydney again.

The House on the waterfront would most likley fit into the highest percentage quartile of the suburb. The upper range of affordability. Also outside the affordability of a larger percentage of the population. The house a street away from the water is more likely to conform to the suburb average and have a greater affordability (and therefore have more potential buyers) and be much more stable in regards to price.

When your IP is in the mid range of affordability or "the average" the average person can afford it. Sure it's not as sexy as the house on the water, but your return is more consistent.

Does that make it clear?

Sir O

 

[nulla nulla]

I would be interested to hear what SECTORS people think will outperform in 2010. Feel free to offer ideas!

My current view of the market in general is that it is pretty much fully valued, so sector selection will be critical in 2010.

A sector trading at a significant discount to net tangible assets. A low price earnings ratio and scope to grow accordingly as the economy recovers. Yield and capital gains, what more could you ask for as you trade the highs and lows?

 

[So_Cynical]

I reckon the REIT's and real estate stocks in general have substantial upside, especially if your patient and can buy at support and hold for the good times ahead....there's still a lot of fear surrounding the sector and that's keeping the share prices somewhat volatile and the stocks in general under valued...IMO

Real estate also provides some good dividend/distribution yields and arguably gives the investor some exposure to the upside of inflation, assuming asset prices raise with it...assuming we get some inflation pressure over the next few years.

IMO of course.

 

[dutchie]

cash

 

[Garpal Gumnut]

cash

gg

 

[Fleeta]

cash

gg

Wow! On what basis? Expecting massive deflation?

With the US needing to borrow $2 trillion next year, will all the foreign money get pulled from Oz and back to US government? Is this the trigger for deflation is Oz? Wouldn't this mean Oz would reduce interest rates?

 

[ROE]

OK, so I am fully cashed up with nowhere to go - here is my take

Property - over-valued, with IR increasing and grants disappearing, property will underperform in 2010.

Shares - likely over-valued, PE ratios will be high considering 2010 earnings will probably not be great, yields will be cut

Cash - likely to be eroded by inflation, higher IR may help

Gold/Silver - so pumped up by everyone at the moment I don't know whether to believe it or not

What is everyone doing with their coin and why???

Best asset class always the one that trades below it intrinsic value 5 or 10 years from now

You have a long term view of the world 10 years from now you buy stuff that people for some reason doesn't like, has some short term problems that can be fixed, like a law suit, one off bad decision.

As long as the business fundamentals and core structure in place ...you rock on and accumulate as much as you can..

Watch the world goes by and enjoy life, enjoy franking dividend and drink nice coffee.

10 years gone by you said damn that price was pretty cheap back then
maybe I cash some out now and buy a new car or take a holiday
all fully funded and debt free

 

[Sean K]

cash

cash

gg

Yep.

Especially if you are going to be sailing around the world for most of the year.

 

[joeyr46]

Yep.

Especially if you are going to be sailing around the world for most of the year.

Yep and in US dollars toboot because it is the most detested asset class of them all at the moment